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Assignment 2: Break-Even Point Formulas Before making hiring or purchasing decisions, health care organizations must consider whether the decision is financially profitable. By calculating break-even...

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Assignment 2: Break-Even Point Formulas

Before making hiring or purchasing decisions, health care organizations must consider whether the decision is financially profitable. By calculating break-even points, organizations are able to examine actual costs and make more sound financial decisions. For this Assignment, you use data from an imaging center and calculate break-even points.

To prepare for this Assignment:

Review the Week 8 Assignment 2 document provided to you by the Instructor. Examine the imaging center scenario. Reflect on how you will use the provided financial data to calculate break-even points. Refer to Chapter 9 ofFinancial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applicationsfor additional guidance.

The Assignment:

Given the imaging center scenario and financial data, complete the“Week 8 Assignment 2 Break Even Excel Template”.

Answered Same Day Jul 17, 2020

Solution

Aarti J answered on Jul 19 2020
135 Votes

Week 8 Assignment 2 Template
                    Break-Even Point
                                        Part a.        Part b.        Part c.        Part d.
                        Givens From Problem:    Costs            Dollars     No.    Dollars     No.    Dollars    No.    Dollars    No.
                        A    56,598.64            $56,598.64    217.69    $32,721.09    251.70    $65,794.39    299.07    $66,560.00    $ 256
                        B    56,598.64            $56,598.64    217.69    $32,721.09    251.70    $65,794.39    299.07    $66,560.00    $ 256
                        C    56,598.64            $56,598.64    217.69    $32,721.09    251.70    $65,794.39    299.07    $66,560.00    $ 256
                        D    56,598.64            $56,598.64    217.69    $32,721.09    251.70    $65,794.39    299.07    $66,560.00    $ 256
                        E    56,598.64            $56,598.64    217.69    $32,721.09    251.70    $65,794.39    299.07    $66,560.00    $ 256
                        F    56,598.64            $56,598.64    217.69    $32,721.09    251.70    $65,794.39    299.07    $66,560.00    $ 256
                        G     56,598.64            $56,598.64    217.69    $32,721.09    251.70    $65,794.39    299.07    $66,560.00    $ 256
                        H     56,598.64            $56,598.64    217.69    $32,721.09    251.70    $65,794.39    299.07    $66,560.00    $ 256
                        I    56,598.64            $56,598.64    217.69    $32,721.09    251.70    $65,794.39    299.07    $66,560.00    $ 256
            A                        B                        C                        D
    Reimbursement                         Reimbursement                 130        Reimbursement                         Reimbursement                 130
        Per Mammography (P)            $ 260                        $ 260                        $ 220                        $ 260
    Fixed Costs                $ 32,000        Fixed Costs                $ 32,000        Fixed Costs                $ 32,000        Fixed Costs                $ 32,000
    Equipment lease                $ 22,000        Equipment lease                $ 22,000        Equipment lease                $ 22,000        Equipment lease                $ 22,000
    Equipment maintenance                $ 10,000        Equipment maintenance                $ 10,000        Equipment maintenance                $ 10,000        Equipment maintenance                $ 10,000
    Total Fixed Costs (TFC)                $ 32,000        Total Fixed Costs (TFC)                $ 32,000        Total Fixed Costs (TFC)                $ 32,000        Total Fixed Costs (TFC)                $ 32,000
    Variable Costs                        Variable Costs                        Variable Costs                        Variable Costs
    Variables Costs based on Dollar Amount per Unit                        Variables Costs based on Dollar Amount per Unit                        Variables Costs based on Dollar Amount per Unit                        Variables Costs based on Dollar Amount per Unit
    Technologist costs                $ 68        Technologist costs                $ 68        Technologist costs                $ 68        Technologist costs                $ 102
    Technologist aide                $ 21        Technologist aide                $ 21        Technologist aide                $ 21        Technologist aide                $ 21
    Variable cost                $ 24        Variable cost                $ 24        Variable cost                $ 24        Variable cost                $ 12
            Sum:        $ 113                Sum:        $ 113                Sum:        $ 113                Sum:        $ 135
    Break-Even Point                        Break-Even Point                        Break-Even Point                        Break-Even Point
    Break-Even Units (X)        X = TFC / (P - V)                Break-Even Units (X)        X = TFC / (P - V)                Break-Even Units (X)        X = TFC / (P - V)                Break-Even Units (X)        X = TFC / (P - V)
    Targeted Profit                        Targeted Profit                        Targeted Profit                        Targeted Profit
    Targeted Profit (TF)                $ - 0        Targeted Profit (TF)                $ 5,000.00        Targeted Profit (TF)                $ - 0        Targeted Profit (TF)
    Units required to reach targeted TF, X = (TFC + TF) / (P-V)                        Units required to reach targeted TF, X = (TFC + TF) / (P-V)                        Units required to reach targeted TF, X = (TFC + TF) / (P-V)                        Units required to reach targeted TF, X = (TFC + TF) / (P-V)
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